Fonchim plans a guaranteed return fund

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ITALY - The E1.7bn Italian Fonchim scheme, the closed fund for chemical and pharmaceutical workers, is planning to launch a guaranteed return fund early next year.

In an interview with IPE earlier this week, Andrea Girardelli, Fonchim's managing director, said: "We want to introduce a mandate with a guarantee for people in their 50s who do not want to risk the money they have saved up, and who want to be sure to go into retirement with a certain amount of money and a expected performance result for the last five or six years of their working life," said Girardelli.

The fund has recently appointed investment manager Schroders to manage the scheme's fourth ‘compartment' consisting of severance payments, the 'so-called' TFR, that go into pension funds unless employees specifically choose for their money not to go into the second pillar.

Girardelli, which brands this approach as too passive, said his fund wants to introduce something different instead.

"The TFR compartment is a second-rate compartment: money goes there but you haven't made a decision about it," says Girardelli.

The fund, which plans to roll out the new compartment in six months' time, acknowledges workers who opt for the new guaranteed return compartment would simultaneously be deciding to avoid risk.

Asked how the fund will deliver guaranteed returns, Girardelli argued there are many different ways to do so and stressed the fund would look at these options more closely over the coming months.

Alongside its new TFR compartment, which was effectively launched in July, the fund has three other compartments.

Most of Fonchim's assets are invested in the stabilita fund, predominantly invested in short-term fixed income, while the two other compartments, crescita and moneta, respectively have a 60/40 split between equities and bonds and a 100% equity focus.